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Selling a property bought through affordable housing

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  • 05-11-2013 2:58pm
    #1
    greengirl31
    Registered Users Posts: 416 ✭✭


    Hey there…

    I’m hoping somebody has some experience here …

    I bought a property through Dun Laoghaire Rathdown CoCo affordable housing scheme in 2009. I got a 2 bed apt at a “discount” of 20% at the time. Does anyone know, if I sell it, do I have to repay 20% of the profit of the sale to the council or 20% of the full sale amount ??

    Also, I know renting isn’t strictly allowed but if it’s just covering your mortgage and you’re not making a profit is there allowances made ?? or does the council even check to see if you’re still living in the property ??

    Thanks


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    #2
    The_Morrigan
    Registered Users Posts: 9,368 ✭✭✭The_Morrigan


    I bought in 2008 from SDCC and the terms I had was that if I sold within 10 years I would have to pay back 12% of the profit made on the sale, this percentage would then drop over the next ten years, so that if I sold after 20 years I didn't owe them anything.

    However, this was prior to the burst and if you sell without a profit I can't see how you can adhere to that term.

    As for renting, I'm sure there are many people who have done this without consent from the council, but I'm a firm believer in doing things the right way. They have to be mindful that people may need to move counties for jobs or emigrate, so a discussion with them about it may be required.


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    #3
    Sleepy
    Registered Users Posts: 24,247 ✭✭✭✭Sleepy


    Would be interesting to see what the contract said if the council had a clawback on the profit, does the OP have a clawback on the negative equity!


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    #4
    greengirl31
    Registered Users Posts: 416 ✭✭greengirl31


    OP here .... I don't think I'm in negative equity as I only paid 184k for it .... I don't think I'd make a loss but I certainly wouldn't be making any huge profit. My thinking was that the clawback was on the profit on a sale but someone else I spoke to said it the clawback was on the full sale amount.
    If the clawback in on the profit, well that's not going to be a huge amount but if it's the full sale price it could change my plans dramatically !!


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    #5
    The_Morrigan
    Registered Users Posts: 9,368 ✭✭✭The_Morrigan


    greengirl31 wrote: »
    OP here .... I don't think I'm in negative equity as I only paid 184k for it .... I don't think I'd make a loss but I certainly wouldn't be making any huge profit. My thinking was that the clawback was on the profit on a sale but someone else I spoke to said it the clawback was on the full sale amount.
    If the clawback in on the profit, well that's not going to be a huge amount but if it's the full sale price it could change my plans dramatically !!

    Stating the obvious here - but have you rung the council you bought the house from and asked for a copy of the terms of sale?

    Every person dealing with affordable housing has a different story as there were differing levels of clawback (my neighbour is also on the scheme, but his clawback percentage is different to mine) and every council had their own preferences, I think at one point there was also an independent unit just dealing with affordable housing and bypassing the direct link to the councils.


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    #6
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Greengirl31- first step is to dig out your copy of the contract you signed with the council, your solicitor will normally have given you a copy of it (and kept the original with your paperwork). It will spell out, unequivocally, how the proceeds of a sale might be split between the council and the seller.

    Typically- the percentage clawback- is on a sliding scale, depending on the percentage discount to open market selling price, when you originally purchased the property. For example- if you bought the property at a 25% discount to the open market selling price- you may have a 12.5% clawback on the sale of the property- if sold within the first 10 years, reducing on a flatline basis by 1.25% per annum for the following 10 years- so there would be no clawback due from year 20 onwards.

    The bad news for you- the clawback is normally a percentage of the saleprice- not a percentage of any 'profit' you may have made from the transaction (however- if the clawback would mean the proceeds were insufficient to clear the outstanding mortgage- the clawback would tend to be capped at a sum sufficient to clear the outstanding mortgage.

    It is not calculated as a percentage of 'profit' its as a percentage of the sale price.


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